Turning a Business Trip Into a Vacation Can you mix business and pleasure when claiming tax deductions for business trips? Only if you play by Uncle Sam's rules.
By Joan Szabo •
Opinions expressed by Entrepreneur contributors are their own.
Thinking about attending a business convention and perhapstaking a personal vacation afterward? It is possible to do this anddeduct the cost of travel to a trade show or convention if youfollow certain tax rules. First of all, the expenses cannot be onesthat will be reimbursed by the company. In addition, the conventionmust be directly related to your trade or business.
Another deduction to look into involves meetings on a cruiseship. You can deduct up to $2,000 annually of the expenses incurredwhile attending a business seminar or convention held on a cruiseship. "You can get a deduction for this as long as the cruiseis held on a U.S. ship, all ports of call are located in the U.S.or a U.S. possession, and you report the details regarding thecruise on your tax return," says Bernie Kent, a partner withaccounting and professional services firm PricewaterhouseCoopers HRServices in Detroit. For example, the IRS wants a writtenstatement signed by you giving the total number of days you spenton the trip and the number of hours each day you attended scheduledbusiness activities. You have to include a written program of thebusiness activities. You must also attach a written statementsigned by an officer of the organization or the group sponsoringthe convention that includes a daily schedule of businessactivities and the number of hours you attended the businessactivities.
If you attend a seminar, convention or similar meeting outsideNorth America, then you must establish that it is as reasonable forthe meeting to be held outside North America as within NorthAmerica, taking into account a number of specific factors,including the purpose of the meeting and the activities takingplace.
The IRS says if you travel outside the United States forbusiness, it is possible to deduct travel expenses incurred whilegetting to and from your destination. But if you decide to tack ona vacation, the IRS will expect you to allocate your travelexpenses in proportion to the number of days you spend onnonbusiness activities during the trip.
There are, however, some situations in which you can deduct allof your business-related travel costs for a foreign trip. Oneexample: If you stay outside the United States for a week or less,not counting the day you leave, but counting the day you return,then you can deduct all of your business-related travel expenses.For more information, read IRS Publication 463, available atwww.irs.gov.
The regulations may seem cumbersome, but at least it'spossible to take deductions for a business trip and still enjoy afew days of R&R.
Great Falls, Virginia, writer Joan Szabo has reported on taxissues for 17 years.
